Kathleen Lynch (Cork North Central, Labour)
Link to this: Individually | In context

Question 97: To ask the Minister for Finance if he is satisfied regarding the level of supervision of the financial sector and particularly firms operating out of the Irish Financial Services Centre especially in view of indictments issued in the United States by the corporate crime task force relating to two reinsurances designed and executed through the Dublin bases subsidy of the US company (details supplied); and if he will make a statement on the matter. [7861/06]

Pádraic McCormack (Galway West, Fine Gael)
Link to this: Individually | In context

Question 116: To ask the Minister for Finance if allegations that some reinsurance transactions underwritten through Dublin was outside regulatory oversights have been investigated. [7947/06]

Brian Cowen (Laois-Offaly, Fianna Fail)
Link to this: Individually | In context

I propose to take Questions Nos. 97 and 116 together.

In my role as Minister for Finance, I am responsible for the legal framework governing financial regulation. In the context of the regulatory system put in place through the establishment of the Irish Financial Services Regulatory Authority, IFSRA, under the Central Bank and Financial Services Authority of Ireland, CBFSAI, Act 2003, responsibility for the operation of the regulatory regime and the supervision of financial services firms rests with the Financial Regulator.

The Financial Regulator has highlighted that all regulated entities, whether engaged in international activities or domestic activities, are required to comply with best international practice. Ethical behaviour, including transparency in business dealings, is a key value expected of boards and senior management of all financial entities operating in Ireland. As far as the IFSC is concerned, the Financial Regulator has emphasised that since its inception, the IFSC has been regulated to the highest international standards for all financial activities. Moreover, the regulatory standards applied in the international financial sector are no less stringent than those that apply generally in the industry in Ireland.

As far as the reinsurance sector in particular is concerned, the Deputy may wish to note that it is only comparatively recently that the international community concluded that reinsurance should be subject to a full regulatory regime. In this context my Department and the Financial Regulator have played a full part and have been actively engaged in the process of developing a reinsurance regulatory regime at EU and international level. The EU reinsurance directive was finally published in December 2005. Ireland will be among the first countries in Europe to implement it with the directive expected to be transposed into Irish law by April 2006 — significantly in advance of the transposition deadline of December 2007. This will result in a full solvency regime for reinsurance companies in Ireland. The Irish regime will go beyond the strict minimum requirements of the directive by requiring adherence to explicit standards of corporate governance and by requiring particular disciplines in relation to finite reinsurance.

The specific issues referred to by the Deputy that have been a subject of indictments in the US were orchestrated in the US in order to overstate the capital position of the firm concerned. The Financial Regulator has worked closely at the highest levels with the regulators from the other jurisdictions involved in these transactions with the objective of ensuring that all the issues are dealt with and all the necessary actions are taken, including ensuring that any involvement in such activity no longer has a place in the industry.

The Financial Regulator is always concerned about, and has always acted to ensure, the good reputation of Ireland as a well-regulated market in view of the importance of that reputation to the success and attraction of Ireland as location for the provision of international financial services.